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Marketing In The Age Of Amazon
This article originally appeared in Randy Wootton’s Forbes Tech Council column.
Five years ago, when I was working in adtech, Amazon was not even on my company’s radar. But a recent study revealed how dramatically things have changed in just a few short years: Today, a third of marketers are shifting their ad spend from traditional digital platforms like Google and Facebook to Amazon, the emerging retail giant. This shift is the latest example of how the advertising industry is consolidating, with a few key digital players drawing in the majority of ad spend. (Full disclosure: Percolate is a software vendor to Amazon.)
Amazon advertising has established itself as one of the must-buy properties remarkably quickly. In many ways, this is the result of consumers demanding better protection of their privacy and more compelling experiences online. To survive, marketers in the age of Amazon need to recognize the platform as a necessary part of their marketing strategies and prioritize consumer privacy.
For years, big tech companies like Google and Facebook captured the majority of digital ad spend. In 2017 alone, Facebook and Google accounted for 90% of digital ad spend growth. One way to explain this is through the network effect. As digital has become more and more prominent, consumers have gravitated toward a narrow set of platforms that house the majority of internet users. Facebook is popular and valuable because that’s where users can find most of their friends. This trend has led to an uptick of mergers and acquisitions, like the Facebook-Instagram acquisition in 2012.
This consolidation has created a series of walled gardens — isolated platforms that house a wealth of data on the consumers that use them. For advertisers trying to personalize their campaigns and understand what makes their consumers tick, this makes it difficult to create a single, unified view of a customer. Amazon’s rise to dominance means yet another walled garden marketers need to work around.
So why has Amazon recently become so important to advertisers? Primarily because Amazon is the main place consumers go to buy things. In 2018, the site captured almost 50% of the entire online shopping market. And on top of being efficient, moderately priced, and convenient, Amazon is also very secure.
Breaches and the misuse of data in recent years have led to consumers demanding higher levels of privacy. According to a study, 71% of Americans care deeply about online privacy due to recent privacy concerns. But Amazon has done a good job keeping up with the demand for more stringent privacy. The retail giant has built trust with an immense number of consumers and offers the reach, buying data and market power that convert into real value for advertisers. According to an NPR/Marist survey, over two-thirds of American online shoppers say they have a high level of trust in Amazon to protect their privacy and personal information. This is much higher than their trust in online retailers in general.
Meanwhile, Facebook and Google are in the news almost daily for privacy concerns. For example, Facebook is currently facing heavy fines for its Cambridge Analytica data scandal, and Google recently pulled the plug on its social network Google+ due to a 2018 data breach.
There’s no denying it, Amazon is now a key player in the marketing space. It has completely disrupted the traditional retail channel. Consumers don’t visit a store in person to buy a book, electronic device or even groceries — they shop on Amazon. As a result, Amazon closes the loop on the marketing funnel: Consumers can research products on Google, purchase them on Amazon and share them with their friends on Facebook.
To make it in the age of Amazon, marketers need to acknowledge the importance of the retailer as an advertising platform and adjust their campaigns accordingly. With Google and Facebook still prominent, advertisers need to connect their stories across all three platforms but differentiate them for each platform’s unique purpose. This means acknowledging Google as the place consumers go to do their research, Amazon as the place they go to make purchases and Facebook as the place they go to connect with their friends.
Advertisers need to continue to work to get to one view of the customer if they want to create consistent and compelling experiences. Otherwise, customers experience fragmented advertising, stories and content. And fragmentation leads to confusion and disengagement. The best brands need to persevere: In today’s consolidated digital world, if an advertiser wants to make it, they need to prioritize consumer privacy, embrace the rise of Amazon and focus on creating one view of their customers that bridges across the walled gardens.